Revenues and Expenditures Related to Debt Service

At 1,686,369 mFt — 50.2% of total chapter spending — this is the dominant line in the entire debt chapter. These are coupons on market forint bonds issued to finance past deficits and refinance maturing debt. Every additional billion Ft of net deficit issuance today creates a 50–75 mFt recurring annual interest obligation. Switzerland's debt brake reduced federal debt from 25.3% to 13.5% of GDP between 2003 and 2019; Hungary's ratio stands at 74.6%. This line can only be shrunk through primary surpluses.

Interest on MÁP+ and successor retail government bonds — contractual at issuance. The FSI keeps this line. Retail bonds fund roughly 1,300 billion Ft of net annual issuance at yields below comparable institutional instruments, making them the cheapest domestic funding source. The instrument is legitimate; the marketing subsidy for it (XLI-E15) is not. Each basis-point of fiscal credibility improvement the FSI's reform programme delivers translates directly into lower retail bond coupons in future issuance.

Coupon payments on euro- and dollar-denominated sovereign bonds — contractually fixed at issuance, traded on international markets. At 483,633 mFt this is the dominant FX-interest line. Hungary's sovereign spread stands above 400 basis points over German Bunds — the second highest in the EU. Each percentage-point of spread reduction, achievable through fiscal consolidation, saves roughly 37 billion Ft per year on the rolling FX issuance programme. This line is kept; the savings come from reform elsewhere.

Discount on short-term HUF treasury bills — contractual at issuance, determined by the domestic yield curve and MNB base rate. The FSI keeps this line. Treasury bills provide essential short-term liquidity management for the unified treasury account; the discount cost is market-priced, reflecting the risk-free rate plus Hungary's short-end sovereign risk premium. No discretionary element; the cost falls as fiscal consolidation narrows the premium.

Interest on bilateral and multilateral FX loans from the IMF, World Bank, and EBRD is a contractual obligation fixed at the point of borrowing — no discretionary element exists. Early repayment without equivalent refinancing benefit would be economically irrational. The FSI keeps this line because honouring sovereign contracts is a constitutional baseline; the reform argument operates upstream, at future issuance policy, not here.

Interest on forint-denominated loans from international financial organisations — contractual under IFI facility agreements. The FSI keeps this line. HUF-denominated IFI borrowing diversifies the liability mix without adding currency risk to the sovereign balance sheet — a distinct advantage over FX facilities. Portfolio attrition occurs naturally as facilities mature; the relevant reform lever is future borrowing strategy and whether new IFI HUF facilities are entered into on comparable terms.

Underwriting commissions, paying-agent fees, and hedging costs paid to financial intermediaries are not contractually fixed the way coupons are — they vary with issuance volume and the competitiveness of mandate tendering. At 42,476 mFt on 16,391 billion Ft of gross issuance, even a 10-basis-point fee improvement would save several billion Ft annually. A nominal freeze prevents expansion and creates incentive to benchmark against Czech and Polish issuance costs. This allocation costs each Hungarian SZJA payer roughly 9,439 Ft per year.

Interest on FX-denominated bonds sold to domestic investors — contractual at issuance. The FSI keeps this line. Domestic FX bond issuance reduces investor-base concentration risk compared with purely forint instruments; the cost is the credit spread above eurozone rates that Hungary's sovereign risk commands at the time of issuance. No discretionary component; attrition occurs naturally as bonds mature and consolidation progress narrows the spread on new issuance.

Interest on short-maturity retail treasury instruments — contractual at issuance. The FSI keeps this line. Retail short-term paper is a legitimate complement to the retail bond programme, diversifying the maturity profile of household sovereign holdings and providing a liquid savings instrument for households with short time horizons. The cost is fully contractual; it contracts naturally as the primary deficit narrows and gross issuance volume declines.

Bilateral commercial FX facility interest — fully contractual, same logic as XLI-E1. No discretionary element; the obligation is fixed by loan agreements predating the current budget cycle. The FSI keeps this line. Every forint here reflects borrowing decisions taken in prior years; the only correction mechanism is primary balance discipline in other chapters, not renegotiation of contracted terms. The reform argument is at origination, not at coupon-settlement.

Short-term euro commercial paper interest — contractual within each transaction, zero discretionary component. The FSI keeps this line. The ECP programme provides short-term liquidity management flexibility for the Treasury; the cost is determined by EUR money-market rates and Hungary's credit standing at the time of issuance, not by a discretionary policy choice available in this budget cycle. Repayment before maturity carries penalties that exceed any saving.

Net interest cost on repo operations — contractual within each repo transaction, determined by overnight and short-term market rates. The FSI keeps this line. Repo operations are a standard liquidity-management instrument for the unified treasury account; the cost is a byproduct of cash-flow smoothing between tax-receipt peaks and payment dates. Net repo cost is modest at 268 mFt after netting repo income.

ÁKK's institutional running costs — systems, staffing, analytics for managing the sovereign liability portfolio. This is a core state function performed by a small specialised institution at low cost relative to the portfolio it manages. A nominal freeze is appropriate: it signals discipline without disrupting the operational capacity needed to manage 73.5% of GDP in outstanding debt. Estonia-style e-procurement tools could yield incremental savings in future years.

This line funds state advertising for the state's own retail bond products. A private borrower marketing bonds to households bears its own distribution costs; the state has no stronger claim to public subsidy for its marketing than any other bond issuer. Retail penetration already stands at 19.3–21.9% of outstanding government securities — the level at which marginal advertising shows sharply diminishing returns. The 1,926 mFt allocation costs each SZJA payer roughly 428 Ft per year. Eliminate immediately; existing retail investors are unaffected.

Net interest settlements on FX swap and hedging positions — contractual within each derivative transaction. The FSI keeps this line. These instruments hedge the state's FX exposure on its liability portfolio; eliminating them would increase unhedged currency risk, creating much larger potential losses on forint depreciation episodes. The cost at 1,591 mFt is small relative to the risk-management function it performs on the overall FX debt portfolio.